Mortgage approvals for house purchase shrink to three-year low

Mortgage approvals for house purchase hit a three-year low last month, Bank of England figures have confirmed.

The latest lending data shows 61,039 approvals for house purchase mortgages, down from 64,712 in November 2017 and below the previous six-month average of 66,194.

This was the weakest data since January 2015, the Bank of England said, when there were 60,786 approvals for house purchase.

The data also reversed two stronger months of lending in October and November with more than 64,000 approvals in each month.

Jeremy Leaf, north London estate agent and a former RICS residential chairman, suggested it was down to the time of year and said 2018 had started better.

He said: “It is probably no more than we expected at this time of year following relatively strong lending in October and November.

“What we have seen since on the ground is viewing numbers well up on this time last year but it remains to be seen whether this translates into sales in the next month or two. We are waiting for more commitment from buyers before deciding whether this is going to be a better-than-anticipated start to 2018.”

Meanwhile, new figures have revealed vendors are managing to sell their homes at less of a discount to asking prices in all areas of England outside London.

Software provider Hometrack has analysed Zoopla listings data to compare asking and sold prices, and found the average discount narrowed from 3.2% between 2014 and 2016 to 2.9% in 2017.

Birmingham and Manchester recorded the greatest decrease, with vendors now accepting offers just 2.7% below asking price, down from 6% in 2013.

However, London tells a different story.

The capital has registered increased levels of discounting. In 2014, the average discount to asking price was just 0.5%. Weaker, price sensitive demand has seen the discount widen to an average of 4% with the largest discounts of up to 10% being registered in inner London, Hometrack says.

The Scottish system for selling homes is different to England and Wales with property typically marketed as ‘offers over’ a listing price. The analysis shows that sales values are at a premium to listings prices, at 4% in Glasgow and 7% on average above asking price in Edinburgh.

It comes as Hometrack’s December UK Cities House Price Index showed weak price growth in London of 1.8% annually offset decent returns in large regional cities of Edinburgh, Birmingham, Glasgow and Manchester which all registered growth of more than 7%.

Across all 20 UK cities in the index, price inflation was up 5.4% during 2017 to an average of £251,000.

Three regions saw a drop in prices, with Oxford, Cambridge and Aberdeen down 0.9%, 1.4% and 9.9% respectively. The fastest growing city was Edinburgh, up 8.2% over 2017.

Richard Donnell, insight director at Hometrack, said: “The level of discounting provides insight into the strength of underlying demand for housing across UK cities. Asking prices tend to act as the ‘shock absorber’ to softer pricing as demand weakens. However, once discounts get close to 10%, this is when falls in headline prices start to occur.

“These results confirm our view that the housing market is following the pattern registered in previous housing cycles with high rates of growth in London over the first half of the cycle being followed by low growth and an acceleration in regional housing markets as prices recover off a low base. We appear to be at this transition period once again.”

Hometrack’s numbers came on the back of news that home owners have been slashing property prices in prime London postcodes by up to £1m to boost demand.

Buying agent Garrington Property Finders has analysed the asking prices of thousands of homes for sale in London’s 52 most desirable postcode districts during January, and found that the average property is currently listed at 9% below its original price, equating to an average price cut of £223,000.

The discounts are greatest in the most expensive areas. In the elite enclave of St James’s and Victoria, prices have been cut by an average of 14.1% or £765,919.

In Knightsbridge, asking prices have been slashed by 12.1%, equating to an average discount of £927,188, the agent said.

Jonathan Hopper, managing director of Garrington Property Finders, said the immediate driver was the need to boost demand in the area.